SOLUTION: Belle, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years o

Question 1118056: Belle, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years of age. Her investments have been earning 5.25% annual return and she thinks it�s realistic that can be maintained. How much would Belle have to put aside each month, in order to reach her goal?
I have been trying endlessly to get this answer but I always get it wrong on my submission. My answer I arrived at is
7786.37. From doing this
PMT = 1,000,000 / ((1 + 0.0525)^40 -1 )/ 0.0525 Since the annual rate is 5.25%, I arrived at the answer 7786.37, but the website I am submiting to counts it as wrong.
Found 3 solutions by stanbon, solver91311, MathTherapy:
Answer by stanbon(75887)   (Show Source): You can put this solution on YOUR website!
I get the same answer.
Cheers,
Stan H.
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Answer by solver91311(24713)   (Show Source): You can put this solution on YOUR website!

You want monthly periodic payments. The formula you are using is the amount of the periodic payment to achieve a future value, but you are using an ANNUAL rate of interest and 40 ANNUAL periodic payments. Try this instead:

John

My calculator said it, I believe it, that settles it

Answer by MathTherapy(10553)   (Show Source): You can put this solution on YOUR website!

Belle, who has just started her first full-time salary job is determined to have $1 million in her account by the time she retires. She is now 25 and hopes to retire at 65 years of age. Her investments have been earning 5.25% annual return and she thinks it�s realistic that can be maintained. How much would Belle have to put aside each month, in order to reach her goal?
I have been trying endlessly to get this answer but I always get it wrong on my submission. My answer I arrived at is
7786.37. From doing this
PMT = 1,000,000 / ((1 + 0.0525)^40 -1 )/ 0.0525 Since the annual rate is 5.25%, I arrived at the answer 7786.37, but the website I am submiting to counts it as wrong.
Monthly payment:
Solver gave you the correct formula.
Just to show you how off you are: Depositing $7,786.37 per month would yield $12,687,513.78 in 40 years.
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